Energy crisis takes toll on struggling steel firms with power prices four times higher than average
Spiralling energy prices have plunged the steel industry deeper into crisis.
Companies are battling to stay afloat as they grapple with power prices four times higher than average.
Firms were previously paying around £50 per megawatt hour – but are now routinely being slapped with bills of £200.
Feeling the heat: Soaring power prices are making it difficult for companies to make steel profitably during certain hours of the day
The most dramatic spikes have seen prices skyrocket as much as 50 times higher, with quotes of £2,500.
The soaring rates are making it difficult for companies to make steel profitably during certain hours of the day, and they are curbing production.
Fears are rising that this could become more widespread and shake the already-stricken sector, which has seen a succession of companies pushed to the brink over the last few years.
UK Steel said: ‘Record electricity prices are hobbling the UK’s steel sector and widening the already damaging gulf between prices paid by steelmakers in the UK and those in Europe – an issue UK Steel has been warning about for almost a decade.’
Alasdair McDiarmid, operations director at the trade union Community, said: ‘The spikes in electricity prices are incredibly concerning and a threat to UK steelworkers.
‘We need urgent action to combat the UK’s sky-high prices.
‘There is currently a huge price inequality when it comes to electricity prices, with the UK paying twice as much for electricity as our EU competitors.
‘This puts us at a major competitive disadvantage as well as being a barrier to delivering the Government’s climate objectives,’ he said.
Another factor that could hit companies that make recycled steel – rather than fresh steel from blast furnaces – is that after months of rising steel and raw materials prices, these have now started to level off and even fall.
Higher energy costs and falling steel prices could be debilitating for these firms.
Matthew Watkins, principal steel analyst at CRU, said: ‘One other moving part of the jigsaw is that steel prices are now falling globally, having been through an incredible run higher over the past year or so.
‘We expect those falls to continue and so that can also increase the threat that steel mills become unprofitable due to high power costs.’